Around 12 gigawatt-hours of India’s battery energy storage capacity faces potential delays as rising global component prices pressure project profitability. CRISIL Ratings indicates that aggressive bids placed in 2025 are now struggling to meet expected returns, risking about one-fifth of the upcoming pipeline for fiscal years 2027 and 2028.
India's battery energy storage sector is navigating a challenging phase as roughly 12 gigawatt-hours (GWh) of capacity faces potential delays in commissioning. This bottleneck is primarily driven by a reversal in global battery component prices. In 2025, many developers submitted aggressive bids expecting costs to continue falling, but the price rebound in 2026 has significantly squeezed profit margins, making it difficult for many projects to hit their targeted profit percentage, known as the internal rate of return, of 12-14 percent.
Execution and Experience Risks
The ability to complete these projects on time is becoming a key investor concern. According to CRISIL Ratings, about 8 to 9 GWh of the delayed capacity is being managed by companies with limited experience in complex equipment procurement. While projects like solar or wind primarily focus on land acquisition, battery storage systems require the assembly of sophisticated hardware. This creates a high dependence on overseas suppliers, making smaller developers vulnerable to supply chain disruptions and geopolitical shifts that they may lack the resources to manage effectively.
Sector Pipeline Impact
The scale of this disruption is notable, as India has a total pipeline of 50-55 GWh scheduled for completion between fiscal years 2027 and 2028. The 12 GWh currently under pressure represents approximately one-fifth of this total under-construction capacity. Much of this pipeline is tied to government-led auctions where distribution utilities are the primary buyers. If developers fail to meet construction timelines, these contracts could face issues, including potential renegotiations or penalties.
As the sector moves from the planning phase to active construction, the discrepancy between aggressive bidding and the reality of rising procurement costs will likely test the financial resilience of developers. For investors and market participants, the next crucial monitorable is whether developers can maintain their project timelines or if they will seek to defer spending in hopes of a future market correction. The sustainability of these projects will ultimately depend on whether companies can manage cash flow and navigate the ongoing supply chain volatility.